Impact investing can make a difference to Kiwis – and the demand is there
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That was the clear message from our panel of impact investing experts at the first in our series of thought leadership events for 2023, on the growing influence of impact investing.
David Callanan, Public Trust General Manager Corporate Trustee Services, said in his opening address that consumer demand for impact investing products was growing, and it was an “opportunity for all of us” – including fund managers, investors, and everyday Kiwis.
“We are very keen for fund managers to explore investing with social impact in mind, to create positive change.”
James Palmer, CEO of Community Finance which finances social housing projects, said investment was already being made in community housing projects through KiwiSaver schemes such as Pathfinder, Generate and Simplicity. Community Finance gives wholesale investors such as KiwiSaver schemes access to stand-alone, ring-fenced investment vehicles in the form of community bonds.
He explained that with 24,000 households on the waiting list for social housing, further investment in the sector could help “bridge the divide” between the housing need and supply.
The Community Finance model provides investors strong returns while also giving Kiwis warm dry houses and, by extension, helping transform communities for the better.
Shamubeel Eaqub, economist and director on the Community Finance board, said there was plenty of capital in New Zealand, “but it is not being directed at the places where it could bring better returns and outcomes”.
Shamubeel set the scene for guests by providing a powerful outlook of the social and financial impact of the country’s housing crisis, currently affecting around 400,000 families. (His slides can be viewed here)
He said there has been a “significant underinvestment” in housing stock, and a lot more affordable homes were needed to help New Zealanders.
What is needed to solve NZ’s housing problem? “Courageous capital, and speed,” Shamubeel says.
Barry Coates, CEO of Mindful Money, encouraged mainstream fund managers to proactively look at impact investing.
A few KiwiSaver fund managers were “leading the way” but the majority were not investing for social good, Barry said.
Barry said Mindful Money’s research showed consumers were interested in impact investing, and wanted their KiwiSaver money to have a positive social or environmental impact. However, consumers wanted to make sure they still received good returns, he said.
The annual ‘Voices of Aotearoa’ survey of the New Zealand public on ethical and impact investment, undertaken by Mindful Money and the Responsible Investment Association of Aotearoa (RIAA) is to be launched on Friday 26th May.
John Berry, CEO of ethical and actively managed KiwiSaver provider Pathfinder, explained how, in addition to being an early adopter of community bonds, Pathfinder directly invested in solar farms at an early stage, helped build farms at scale, creating a “measurable output” for Pathfinder’s social and environmental impact.
When it came to investors choosing an ethical KiwiSaver provider, he said awareness was a barrier, as was a perception it was hard to switch your KiwiSaver account to a different provider.
“The sector needs to work together to overcome these barriers for investors” he said.
David Callanan says he encourages fund managers to explore the options of impact investing, including in social housing through community bonds, which can have a significant and positive impact on New Zealand and its people.
“The issue of investors receiving a concessionary return (a return on an investment that sacrifices some financial gain to achieve a social benefit) is becoming less relevant as consumer demand is shifting and the actual concession for certain investment vehicles, such as those offered by Community Finance, are approaching zero.” he said.
David and the CTS team want to extend a huge thank you to our speakers for this event, who brought fantastic insights and explored the growth of impact investing in New Zealand.
*As part of the organisation’s 150-year anniversary, Public Trust is hosting a series of thought leadership events for trustee services clients. For more information please contact: [email protected]
For more details on Community Finance’s next bond issuance, contact James through the website.
Mindful Money is also hosting a series of upcoming events. For more information visit the website.
